Will YOU give it a shot?

article link : http://online.wsj.com/article/SB10000872396390443890304578006650462123038.html?KEYWORDS=starbucks+gives+single+serve+a+shot


Starbucks is currently in the midst of launching their newest product, the Verismo single-cup espresso based beverage machine. The Verismo has unique pods that contain coffee and milk, and when used together, can product a latte. This machine has a unique new sleek style, to better fit on top of a kitchen counter, and is also capable of making shots of expresso. This machine is going to be sold at high- end kitchen good stores such as Sur La Table, and Williams Sonoma, as well as in select Starbucks locations. It will be priced at $199 and and the larger version will be priced at $399.

Previous data has shown in the last year only 4% of coffee makers made a profit from selling espresso machines. This means starbucks is taking a large risk entering the espresso machine market. Chief Executive, Howard Schultz, stated in his most recent interview that Starbucks is making a bet with this new machine.

So, with last year espresso machine sales at a mere 4%, and the Chief Executive officer admitting that this is a big risk, why would Starbucks enter into this market? Well, I believe we can look at Chapter 12, regarding Operations and strategy in a global environment, for some answers. Starbucks has one of the most, if not THE most crucial advantage over competitors; Starbucks has brand recognition. Starbucks differentiates themselves from other coffee shops because they provide an “experience”, which sets them apart from the rest of the many places you can get a cup of coffee. But, their newest product launch had nothing to do with this in store “experience”, rather, it is about bringing Starbucks “experience” into your own home. The competitive advantage is about differentiation, cost leadership, and response. Starbucks new Verismo machine touches upon all three, with a strong emphasis on differentiation because there are currently are no other machines like it on the market. According to our book,Competing on differentiation means, “the uniqueness can go beyond both the physical characteristics and service attributes to encompass everything that impacts the customer’s perception of value- and in this case, the Starbucks customer values their own time, their coffe, and their loyalty to the brand itself.

I think this coffee maker will be successful? Will it be a positive thing for Starbucks?

What strategies and data do you think Starbucks is using to make sure sales of this machine are successful?

The operations managers job is to provide competitive advantage and increase productivity… Do you think the OM Manager is doing this in this instance?


7 thoughts on “Will YOU give it a shot?

  1. I personally don’t think that this coffee maker will be a huge success. I think that a lot of people who go to Starbucks go more for the association with having a cup of Starbucks coffee at work or in public rather than the coffee itself. Most people would not be able to differentiate between two different brands of coffee and simply have their favorite because of social aspects that are tied along with the cup of coffee. The type of people that make coffee at home usually do not care about the social recognition tied along with the coffee and simply want to kick start their morning. In conclusion, I think the people that drink Starbucks coffee would rather get it from a Starbucks that make it at home and that leads me to believe that this coffee maker will not sell that well.

  2. I absolutely think this a horrible idea for Starbucks to break into this market. When I think of Starbucks I think of a hip cafe where SOMEONE ELSE makes a cup of coffee for me. When I think of do-it-yourself expresso machines I think of Keurig ( http://www.keurig.com/ )and their K-Cups system. I do not see Starbucks being any more revolutionary then Keurig. From your description it sounds very much like the same thing.

  3. No, I don’t think it be a successful item that people would buy because it will be over priced. I don’t think a medium household would want to have this coffee maker when they could get a cheaper one. Starbucks is known for a place where you want to go and hang out in. They have been successful because of their logo, which represents “High Class”.

  4. Interesting article. I am unsure though as to whether or not this product will be successful. Starbucks has already branded itself as a sort of, luxurious coffee. It is a product that people often drink simply because of the name and not the quality.

    There are a number of coffee makers already on the market that do the same thing the Starbucks single cup machine is aiming to do. However, there are some people who are dearly devoted to the Starbucks brand. Being a college student, I have a slight bias. I feel as though convenience and price make the biggest impact. For example, they just recently opened a Dunkin Donuts underneath the Fullerton Redline stop (which was genius if you ask me). Dunkin Donuts appeals to a very wide variety of people due to their price and convenience. Personally, I would much rather pay two dollars every once in a while on my way to class then spend $400.00 on a machine just because it has the Starbucks logo on it.

    Starbucks definitely understands that they have a loyal client base. I feel as though this is the only reason they are making the product. They know there will be a number of people who purchase the coffee maker due to the fact that it is a Starbucks product. I am guessing that the brains behind this operation understand that this. They also understand though that it is just another way to keep selling Starbucks coffee. The person who purchases the product also has to continually purchase the Starbucks coffee the machine needs in order to make the “perfect brew.”

    I also don’t feel as though this is necessarily a competitive advantage. I think this because Starbucks has already established itself as a frontrunner in the coffee industry. These machines have already been put on the market and so Starbucks is just simply mimicking products that have already been put out. The Starbucks name is the competitive advantage.

  5. This is an interesting article and it is really hard to say whether it will be successful or not. Starbucks coffee is definitely viewed by many as a higher quality product than some other coffee shops and has its loyal customers. Given the current economy, the price of the machine and the cost of the special coffee pods to go with it you would think this product wouldn’t be successful, but some people might see it differently. While people are cutting back on spending, due to the economy, some people allow themselves to get that cup of Starbucks coffee now and then because it is the only luxury they can have right now. Also, Especially now with the fall season and winter creeping up, being able to make your favorite Starbucks coffee without leaving your home would definitely appeal to some people. At the same time I do agree with the other comments that there are other products just like it and that people go to Starbucks to hang out and to have that logo on their cups.

  6. I would think that at the end of the day it does come down to brand recognition and brand loyalty most of all. Starbucks consumers are like Apple consumers, they tend to stay ferociously loyal to their respective preferred businesses. Starbucks didn’t get as successful as they are without making the right moves and conducting the proper research to propel themselves ahead of their competitors. With this particular endeavor, they probably know they stand a chance to lose a lot, but conversely they probably stand an even bigger chance to gain a lot more. Their research has probably indicated favorable demand for the product. Customers who are loyal and value the Starbucks experience and product would gladly find a way to bring it home with them. It’ll probably turn out to be s smart move on Starbucks’ part.

  7. I honestly don’t think that Starbuck’s is going to have success by selling the espresso maker. One thing that they should have kept in mind is that they would probably decrease revenue since they are advertising the coffee maker. Loyal customers will probably not shop at Starbucks as often if they buy the espresso machine and it would cause sales to decrease. One of the comments above states that the machine will most likely be bought by high income people and I think it will becaue with this economy no one really wants to buy such expensive machines especially to just make coffee.

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